The consumer inflation index number is always an important indicator on where Federal reserve policy could be heading.

Consumer prices in the United States increased 2.1 percent year-on-year in January, which is unchanged from December and above market expectations of 1.9 percent. The index for all items less food and energy rose 1.8 percent over the past year, while the energy index increased 5.5 percent and the food index advanced 1.7 percent.

For investors it could be of interest taking note that analysts’ expectations see the inflation rate in the United States at about 2.20 percent by the end of Q1 of this year, at 2.50 percent within 12 months while the long-term CPI is projected to trend around 2.50 percent in 2020.

Fact is, that the latest consumer price inflation (CPI) figures will certainly do nothing to soothe market fears of faster monetary tightening with the January CPI rising 0.5 percent for the month, topping expectations for 0.3%.

The core year-on-year consumer price inflation reading, which had been expected to fall, instead held steady at 1.8 percent. And the three-month annualized gain in the core reading hit 2.9 percent, which is the fastest rate since 2011.

Besides all that, the New York Fed gave us yesterday its updated Underlying Inflation Gauge (UIG), which captures sustained movements in inflation from information contained in a broad set of price, real activity, and financial data.

The UIG derived from the “full data set” increased from a currently estimated 2.94 percent in December to 3.00 percent in January. The UIG measures currently estimate trend CPI inflation to be approximately in the 2.2 percent to 3.0 percent range, with the prices-only measure close to the actual 12-month change in the CPI.

As communicated by the U.S. Treasury, the 10-year reference yield yesterday, Feb-14, was set at 2.91 percent.

In simple words, the Fed’s core inflation rate objective of 2 percent is within striking distance.

Investors should expect further rising interest rates and try to take into account what that will mean for their investments over the short to median term. Four Fed rate hikes are now fully in the cards for this year.

I think, investors might have to get used to that, which is of course not the overall consensus at the moment, at least not yet.

Consumer price inflation like most economic data is revised a lot. A large chunk of CPI is pure fiction. Fully a quarter of the CPI basket is made up of owners-equivalent rent. An entirely factious price that no one has ever paid, and no one will ever pay.

The problem is, that markets have suddenly woken up to the fact that the Fed and other central banks are -- or will be -- tightening rates.

Economists have been saying this for a year now that inflation was being artificially suppressed by non-market forces.

Besides all that, U.S. retail trade fell unexpectedly by 0.3 percent month-over-month in January, after showing no growth in December and below market expectations of a 0.2 percent gain. It was the largest decline in retail trade since February last year, mainly due to a drop in auto sales. Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged in January after a downwardly revised 0.2 percent drop in December.

That said, it’s also a fact that most Americans do have jobs and the job situation is getting better. Wages increased 4.47 percent in November. Wage Growth is expected to be at about 4.55 percent by the end of this quarter and looking forward, U.S. wage growth is estimated to be at about 4.81 percent in about 12 months while in the long-term, wages and salaries growth is projected to trend at around 5.24 percent in 2020.

I wouldn’t expect problems coming from that side.

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.

Investors should expect further rising interest rates and try to take into account what that will mean for their investments over the short to median term. Four Fed rate hikes are now fully in the cards for this year.